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Thursday, 16 September 2010 10:04

False Rebound

Against all expectations the Q2 GDP figures for the UK economy demonstrated a growth of a remarkable 1.1%, one of the highest figures found anywhere amongst the emerging economies. Whilst political parties on both sides of the House debated as to who should receive the credit for such a boost, the real results were being felt across the markets.

As the figures were released, unsurprisingly, sterling took a bounce against both the dollar and the euro. This hike wasn’t solely the result of the good GDP figures for the UK, but also on the back of fears that the stress-testing of euro banks would reveal that some banks weren’t quite up to scratch. These fears were later born out, and sterling looks set to rise further across the coming week.

Economic experts in the UK predicted rather gloomily that the 1.1% growth would be as a good as it gets, pointing to the growth provided by the building and construction sector as a one-off due to catching up on the backlog left behind after the particularly bad weather of the winter.

There is, however, another problem in the long run for the UK economy and that’s the fact that as long as it continues to perform well (or, more accurately, outperform the eurozone) sterling growing stronger is not actually going to be that much of an assistance to the recovery. The UK’s largest trading partner by far is Europe, and the government really needs a weaker pound against the euro to bring in extra trade to the UK and further drive the recovery.

Of course, on current evidence, that simply isn’t going to happen, or not for any time soon, leaving the UK without a major region to export to (a problem that isn’t unique to Britain by any stretch) and relying, to a certain extent, on exports to continue the boost in the economy. Whilst the services sector may continue to perform strongly, there are other places in the world to do business and that business is likely to gravitate away from the UK if it’s much cheaper to do it somewhere else.

So, sterling finds itself in between a rock and a hard place and some people are arguing that it would have been better to join the euro and be in the position of Germany, for example, which has seen exports within Europe increase rapidly over the last decade. Of course, a German bank failed the stress-tests as well, so there are further problems to be dealt with in the eurozone.

It is not an overstatement to say that the strength of sterling will dictate the strength and the extent of the recovery in the UK economy. Regardless of how you trade in the markets, whether it’s directly or through a spread betting company like CMC Markets, make sure you keep an eye on the comparative strength of sterling against the other major currencies, it is guaranteed to have an impact on your markets.

Published in Forex Guides
Thursday, 16 September 2010 08:47

Forex Daily News: GBP Making Moves on USD

USD Dollar (USD) – The Dollar weakened against most majors in Forex trading after US Industrial production fell more than expected in August (0.2% vs. 0.3% forecast vs. 0.6% in July). Additionally, the Empire State Manufacturing Index also fell more than expected (4.1 vs. 8.7 forecast) and other mixed data came out during the session, which supported negative sentiment for the Dollar. The NASDAQ and Dow Jones strengthened by 0.50% and 0.44% respectively. Crude oil decreased by 1.0% to close at $76 a barrel, and Gold (XAU) weakened by 0.2%,closing at $1268.70 an ounce. Today, Unemployment Claims are expected to rise from 451K to 463K, PPI is expected at 0.3% vs. 0.2% prior, Treasury Sec Geithner Speaks, and TIC Long-Term Purchases are expected to weaken from 44.4B to 37.9B.

EURO (EUR) – The Euro traded near a one month high against the Dollar amid speculation that the Federal Reserve will buy additional Treasury securities this year to help sustain growth as the economic recovery falters. The momentum of the EUR/USD has been bullish the past few days, and as long it's above 1.2950, the trend continues to be positive for the Euro. Overall, EUR/USD traded with a low of 1.2955 and with a high of 1.3037. Today, the Trade Balance is expected at -0.7B vs. -1.6B prior.

EUR/USD – Last: 1.2992










British Pound (GBP) – The Pound strengthened against the Dollar, rising to a 4 week high following a flurry of mixed U.S. economic data, which supports higher yielding assets. The main resistance of the GBP/USD on the daily chart is 1.5700, and if the price trades above this level, the momentum will continue to be bullish .Overall, GBP/USD traded with a low of 1.5448 and with a high of 1.5652. Today, Retail Sales are expected to weaken from 1.1% to 3.3%, and CBI Industrial Order Expectations are expected at -12 vs. -14 prior.

GBP/USD - Last: 1.5615










Japanese Yen (JPY) –The Yen weakened against all major currencies, falling to a 12 day low versus the Dollar. This came after Japan's government said it intervened in currency markets for the first time in 6 years in order to stem the Yen's sharp gains. The trend of the USD/JPY is opposite from downwards to upwards since yesterday, therefore a long position is preferred, and the next resistance on the daily chart is located at 86.50 levels. Overall, USD/JPY traded with a low of 82.87 and with a high of 85.77. No economic data is expected today.

USD/JPY-Last: 85.28










Canadian dollar (CAD) – The Canadian Dollar rose a bit versus the US Dollar after weaker than forecast manufacturing data was released in the U.S., renewing Canada’s concerns about the economy and its largest trading partner. As long the USD/CAD is below 1.0400 levels, a short position is preferred and the momentum is strongly bearish. The next support on the daily chart is at 1.0200. Overall, USD/CAD traded with a low of 1.0251 and with a high of 1.0320. No economic data is expected today.

USD/CAD - Last: 1.0274









Published in Forex Articles
Wednesday, 15 September 2010 09:48

Forex Daily News: Japanese Try to Rein in Yen

USD Dollar (USD) – The dollar slumped across the board in Forex Trading, as risk appetite and positive macro data led the market by fueling some optimism. Core Retail Sales came out at 0.6%, better than the expected 0.3% and Retail Sales came out at 0.4%, better than the expected 0.3%. The Stock Markets in the U.S. closed almost unchanged with the Dow Jones losing -017% and NASDAQ adding 0.18%, this occurring despite the surge in currencies markets. Crude Oil jumped to $78, but failed to hold there and fell by -0.5%, closing at $76.80 a barrel. Gold (XAU) traded on a new historical high, reaching the $1275 area, but closed at $1268 an ounce. Today, the NY Empire State Manufacturing Index is expected at 5 vs. 7.1 previously. The Import Price Index is expected unchanged at 0.2%, and the Industrial Production report is expected at 0.3% vs. 1% previously.

EURO (EUR) – The euro soared versus the dollar, reaching a 5 week high despite the negative macro data. The German ZEW Economic Sentiment came out at -4.3, worse than the expected 11.3, and Industrial Production came out at 0%, worse than an expected 0.2%. Holding above the support level of 1.2940 keeps the momentum positive for the pair. Overall, EUR/USD traded with a low of 1.2828 and with a high of 1.3032. Today, the CPI is expected unchanged at 1.6% and the Core CPI is expected at 0.9% vs. 1% previously.

EUR/USD – Last: 1.2969








British Pound (GBP) – The Pound has gained versus the dollar as it finally breached the 1.5485 resistance level it was capped by. The CPI came out at 3.1%, better than an expected 2.9%, and the Core CPI came out at 2.8%, better than an expected 2.6%. Holding above the support level of 1.5430, keeps the momentum positive for the pair. Overall, GBP/USD traded with a low of 1.5347 and with a high of 1.5585. Today, the Claimant Count Change is expected at -5.1K vs. -3.8k previously. Also, BoE Gov Mervyn King will be speaking later today.

GBP/USD - Last: 1.5487










Japanese Yen (JPY) – The Yen gained against the dollar as the pair broke the 83.30 support level and reached a fresh 15 year low on speculation that the FED will keep buying treasury securities to sustain economic growth. Later on, however, announcements that the Japanese government would intervene on behalf of the Yen, turned the market momentum, and fueled pairs trading against the Yen by almost 200 pips. Holding above the support level of 83.80 turns the momentum to positive for the pair, as oversold conditions are seen here. Overall, USD/JPY traded with a low of 82.86 and with a high of 84.57. Today, the Tertiary Industry Index is expected at 0.7% vs. -0.1% previously.

USD/JPY-Last: 84.99








Canadian dollar (CAD) – Canada's dollar gained versus the U.S. dollar reaching the 1.02 area on speculations that BoC will continue to raise interest rates, but failed to sustain gains and jumped up to 1.03 areas. The Labor Productivity came out at -0.8%, worse than the expected -0.5%. Holding below the 1.0340 resistance area keeps the momentum negative for the pair. Overall, USD/CAD traded with a low of 1.0214 and with a high of 1.0304. Today, Manufacturing Sales are expected unchanged at 0.1%.

USD/CAD - Last: 1.0314








Published in Forex Articles

One might regard forex as being somewhat simple: you just need to know which pair to trade, when to get in, and when to get out. (An exception to this is with carry trading, where you also need to pay attention to a few other factors). Here we discuss some of the major signals for knowing when to exit a trade.

The basic set of tools, provided for free by most forex brokers, are almost identical to the entry signals. With entry, you look for a trend and jump in just before it starts. With exits, you simply look for the end of a trend or the beginning of a new one, and jump out before it’s too late.

The big difference is that you are not usually looking for a new trend. By the time you can identify that a new trend has begun and is measurably significant, it’s already too late—you’re losing money. Instead, you should exit the market as soon as it is clear that the trend you bought on has ended. Trend following is just one of several ways to become successful in the forex market.

So you could start with crossovers in the moving average. If you used that to identify an uptrend, now you’re looking for a reversal with crossover from above. But hopefully you won’t get that far. Instead, you should watch the percentage of change in the short term moving average. If the short term average remains unchanged over a period of time, the trend has probably ended.

Of course, this means that the average directional index (ADX) or moving average convergence/divergence (MACD) both become more significant for you. Look for stabilization or stagnation in these indicators as a signal for the end of a trend. Some of the most helpful forex exit signals are the momentum indicators such as TRIX, smoothed rate of change, or relative strength.

It is also easy to draw a trend line based on Fibonacci pivot points. When prices begin to fall below the original trend line and you see a new pattern of pivot points, the trend has ended. Look for resistance or support that offers any type of pattern. You can also rely on exponential moving average (200 EMA). The problem here is that it is often hard to know if you are dealing with a new trend or just with retracement. This is where price candles can be helpful in some cases. Since the end of a trend is often more analytically complex than the beginning, knowing your analysis well is very important.

News shocks are generally a bad way to make exit decisions, since your response will be too late, anyway. However, if you do have reason to suspect an event and you are more accurate than the market, this might be useful. Generally, your stop loss order will kick in before you can.

And this is where the most important exit signal comes in. You should always have stop-losses in place for every trade you make. Quite simply, you’ve found an exit signal when your stop-loss kicks in and ends the trade for you!

This also relates to the biggest value in automated systems: rely on your software to free you from a position before you lose too much. You can set this up in complex ways to help you even with profitable trades. If more traders relied on their own analysis to get them into the market and software as one of several signals to get them out, they would significantly improve their profits.

Published in Forex Guides
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Interview with Matthew Sheppard

Senior Forex Advisor at XForex

1. What is your name and position?

Hello, my name is Matthew Sheppard and I am a senior forex advisor at XForex.

2. What is your experience and professional background?

In the last 6 years I had filled several positions in financial institutions such as a stock broker, a foreign exchange desk manager, a financial consultant and in my recent role I serve as a senior Forex advisor for XForex which is an online forex company.

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Because of our high presence on the web, most of our business comes from the online world.

5. Why should a trader pick XForex from all forex brokers?

Aside from all the benefits that XForex offer like commission-free trading, 24/7 online support, high leverage (200:1), XForex offers educational and learning trading experience that you won’t find anywhere else..

Our team of experts and financial trainers provide personal assistance and guide clients to financial success. We provide daily analysis and market reviews to our clients giving them a better understanding of the market and helping them trade profitably.

6. From your experience, what advice would you give a person who wants to enter the forex world?

My advice to the beginning trader entering the Forex world is as follows:
  • Learn the market and understand what you’re getting into.
  • Research and find the broker that suits your needs and wants. Look for a good offering but more importantly customer service, don’t go for the low rates offer without being certain they have a good customer service department. From my extensive experience in the Forex world your key to success will be your client-broker relationship. I can honestly say that at XForex they put an emphasis on servicing clients, which is so important.
  • Invest smartly and calculate your risks.
  • Always know when to get out of a trade.

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